Change in Control. In the event of a change in control in which the successor or acquiring company does not assume or substitute outstanding awards, then the vesting of such awards will accelerate, and options will become exercisable in full prior to the consummation of such event.
Amendment and Termination. Our board of directors may amend or terminate the 2018 Plan at any time, subject to stockholder approval as required by applicable law. In connection with the effectiveness of our 2020 Plan, no further awards will be granted under the 2018 Plan.
2020 Incentive Award Plan
We have adopted, subject to stockholder approval, the 2020 Plan, which will be effective on the date immediately prior to the date our registration statement of which this prospectus forms a part becomes effective. The principal purpose of the 2020 Plan is to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. The material terms of the 2020 Plan are summarized below.
Share Reserve. Under the 2020 Plan, shares of our Class A common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, SARs, restricted stock awards, RSUs, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash based awards. The number of shares initially reserved for issuance or transfer pursuant to awards under the 2020 Plan will be increased by (i) the number of shares represented by awards outstanding under our 2008 Plan, Hotel Tonight Plan, or 2018 Plan, or Prior Plan Awards, that become available for issuance under the counting provisions described below following the effective date and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (A) 5% of the shares of all series of our common stock outstanding on the last day of the immediately preceding year and (B) such smaller number of shares of stock as determined by our board of directors; provided, however, that no more than shares of stock may be issued upon the exercise of incentive stock options.
The following counting provisions will be in effect for the share reserve under the 2020 Plan:
| • |
to the extent that an award (including a Prior Plan Award) expires, lapses or is terminated, converted into an award in respect of shares of another entity in connection with a spin-off or other similar event, exchanged for cash, surrendered, repurchased or canceled, in any case, in a manner that results in the company acquiring the underlying shares at a price not greater than the price paid by the participant or not issuing the underlying shares, such unused shares subject to the award at such time will be available for future grants under the 2020 Plan; |
| • |
to the extent shares are tendered or withheld to satisfy the grant, exercise price or tax withholding obligation with respect to any award under the 2020 Plan or a Prior Plan Award, such tendered or withheld shares will be available for future grants under the 2020 Plan; |
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to the extent shares subject to stock appreciation rights are not issued in connection with the stock settlement of SARs on exercise thereof, such shares will be available for future grants under the 2020 Plan; |
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| • |
the payment of dividend equivalents in cash in conjunction with any outstanding awards or Prior Plan Awards will not be counted against the shares available for issuance under the 2020 Plan; and |
| • |
shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by us or any of our subsidiaries will not be counted against the shares available for issuance under the 2020 Plan. |
In addition, the sum of the grant date fair value of all equity-based awards and the maximum that may become payable pursuant to all cash-based awards to any individual for services as a non-employee director during any calendar year may not exceed $1,000,000.
Administration. The leadership development, belonging and compensation committee of our board of directors is expected to administer the 2020 Plan unless our board of directors assumes authority for administration. The board of directors may delegate its powers to a committee, which, to the extent required to comply with Rule 16b-3, is intended to be comprised of “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. The 2020 Plan provides that the board of directors or leadership development, belonging and compensation committee may delegate its authority to grant awards other than to individuals subject to Section 16 of the Exchange Act or officers or directors to whom authority to grant awards has been delegated.
Subject to the terms and conditions of the 2020 Plan, the administrator has the authority to select the persons to whom awards are to be made, to determine the number of shares to be subject to awards and the terms and conditions of awards, and to make all other determinations and to take all other actions necessary or advisable for the administration of the 2020 Plan. The administrator is also authorized to adopt, amend or rescind rules relating to administration of the 2020 Plan. Our board of directors may at any time remove the leadership development, belonging and compensation committee as the administrator and revest in itself the authority to administer the 2020 Plan.
Eligibility. Awards under the 2020 Plan may be granted to individuals who are then our officers, employees or consultants or are the officers, employees or consultants of certain of our subsidiaries. Such awards also may be granted to our directors. However, only employees of our company or certain of our subsidiaries may be granted incentive stock options, or ISOs.
Awards. The 2020 Plan provides that the administrator may grant or issue stock options, SARs, restricted stock, RSUs, performance bonus awards, performance stock units, other stock- or cash-based awards and dividend equivalents, or any combination thereof. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award.
| • |
Nonstatutory Stock Options, or NSOs, will provide for the right to purchase shares of our common stock at a specified price which may not be less than fair market value on the date of grant, and usually will become exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the participant’s continued employment or service with us and/or subject to the satisfaction of corporate performance targets and individual performance targets established by the administrator. NSOs may be granted for any term specified by the administrator that does not exceed ten years. |
| • |
Incentive Stock Options, or ISOs, will be designed in a manner intended to comply with the provisions of Section 422 of the Code and will be subject to specified restrictions contained in the Code. Among such restrictions, ISOs must have an exercise price of not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, and must not be exercisable |
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after a period of ten years measured from the date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the 2020 Plan provides that the exercise price must be at least 110% of the fair market value of a share of common stock on the date of grant and the ISO must not be exercisable after a period of five years measured from the date of grant.
| • |
Restricted Stock may be granted to any eligible individual and made subject to such restrictions as may be determined by the administrator. Restricted stock typically may be forfeited for no consideration or repurchased by us at the original purchase price if the conditions or restrictions on vesting are not met. In general, restricted stock may not be sold or otherwise transferred until restrictions are removed or expire. Purchasers of restricted stock, unlike recipients of options, will have voting rights and will have the right to receive dividends, if any, prior to the time when the restrictions lapse; however, extraordinary dividends will generally be placed in escrow, and will not be released until restrictions are removed or expire. |
| • |
Restricted Stock Units may be awarded to any eligible individual, typically without payment of consideration, but subject to vesting conditions based on continued employment or service or on performance criteria established by the administrator. Like restricted stock, restricted stock units may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike restricted stock, stock underlying restricted stock units will not be issued until the restricted stock units have vested, and recipients of restricted stock units generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied. |
| • |
Stock Appreciation Rights, or SARs, may be granted in connection with stock options or other awards, or separately. SARs granted in connection with stock options or other awards typically will provide for payments to the holder based upon increases in the price of our common stock over a set exercise price. The exercise price of any SAR granted under the 2020 Plan must be at least 100% of the fair market value of a share of our common stock on the date of grant. SARs under the 2020 Plan will be settled in cash or shares of our common stock, or in a combination of both, at the election of the administrator. |
| • |
Performance Bonus Awards and Performance Stock Units are denominated in cash or shares/unit equivalents, respectively, and may be linked to one or more performance or other criteria as determined by the administrator. |
| • |
Other Stock- or Cash-Based Awards are awards of cash, fully vested shares of our common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our common stock. Other stock- or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards. The administrator will determine the terms and conditions of other stock- or cash-based awards, which may include vesting conditions based on continued service, performance and/or other conditions. |
| • |
Dividend Equivalents represent the right to receive the equivalent value of dividends paid on shares of our common stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are converted to cash or shares by such formula and such time as determined by the administrator. In addition, dividend equivalents with respect to an award subject to vesting will either (i) to the extent permitted by applicable law, not be paid or credited or (ii) be accumulated and subject to vesting to the same extent as the related award. |
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Any award may be granted as a performance award, meaning that the award will be subject to vesting and/or payment based on the attainment of specified performance goals.
The 2020 Plan also provides that unless otherwise provided by administrator or otherwise directed by the holder of an option or SAR, each vested and exercisable option and SAR outstanding on the automatic exercise date with an exercise price per share that is less than the fair market value per share as of such date will automatically be exercised on such date.
Adjustments of Awards. The administrator has broad discretion to take action under the 2020 Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations, and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders known as “equity restructurings,” the administrator will make equitable adjustments to the 2020 Plan and outstanding awards.
Change in Control. In the event of a change in control, unless the administrator elects to terminate an award in exchange for cash, rights or other property, or cause an award to accelerate in full prior to the change in control, such award will continue in effect or be assumed or substituted by the acquirer, provided that any performance-based portion of the award will be subject to the terms and conditions of the applicable award agreement. In the event the acquirer refuses to assume or replace awards granted, prior to the consummation of such transaction, awards issued under the 2020 Plan (other than any portion subject to performance-based vesting) will be subject to accelerated vesting such that 100% of such awards will become vested and exercisable or payable, as applicable. The administrator may also make appropriate adjustments to awards under the 2020 Plan and is authorized to provide for the acceleration, cash-out, termination, assumption, substitution or conversion of such awards in the event of a change in control or certain other unusual or nonrecurring events or transactions.
Amendment and Termination. The administrator may terminate, amend or modify the 2020 Plan at any time and from time to time. However, we must generally obtain stockholder approval to the extent required by applicable law, rule or regulation (including any applicable stock exchange rule), and generally no amendment may materially and adversely affect any outstanding award without the affected participant’s consent. Notwithstanding the foregoing, an option may be amended to reduce the per share exercise price below the per share exercise price of such option on the grant date and options may be granted in exchange for, or in connection with, the cancellation or surrender of options having a higher per share exercise price without receiving additional stockholder approval.
No incentive stock options may be granted pursuant to the 2020 Plan after the tenth anniversary of the effective date of the 2020 Plan, and no additional annual share increases to the 2020 Plan’s aggregate share limit will occur from and after such anniversary. Any award that is outstanding on the termination date of the 2020 Plan will remain in force according to the terms of the 2020 Plan and the applicable award agreement.
Employee Stock Purchase Plan
We have adopted, subject to stockholder approval, the Employee Stock Purchase Plan, which we refer to as our ESPP. The ESPP will be effective on the date immediately prior to the date the registration statement of which this prospectus forms a part becomes effective. The ESPP is designed to allow our eligible employees to purchase shares of our common stock, at periodic intervals, with their accumulated payroll deductions. The ESPP consists of two components: a Section 423 component, which is intended to
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qualify under Section 423 of the Code and a non-Section 423 component, which need not qualify under Section 423 of the Code. The material terms are summarized below.
Administration. Subject to the terms and conditions of the ESPP, our leadership development, belonging and compensation committee will administer the ESPP. Our leadership development, belonging and compensation committee can delegate administrative tasks under the ESPP to the services of an agent and/or employees to assist in the administration of the ESPP. The administrator will have the discretionary authority to administer and interpret the ESPP. Interpretations and constructions of the administrator of any provision of the ESPP or of any rights thereunder will be conclusive and binding on all persons. We will bear all expenses and liabilities incurred by the ESPP administrator.
Share Reserve. The maximum number of our shares of our Class A common stock which will be authorized for sale under the ESPP is equal to the sum of (i) 4,000,000 shares of Class A common stock and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (A) 1% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding year and (B) such number of shares of common stock as determined by our board of directors; provided, however, no more than shares of our common stock may be issued under the ESPP. The shares reserved for issuance under the ESPP may be authorized but unissued shares or reacquired shares.
Eligibility. Employees eligible to participate in the ESPP for a given offering period generally include employees who have been employed by us or one of our subsidiaries for a specified period of time prior to the first day of the offering period, or the enrollment date. Our employees (and, if applicable, any employees of our subsidiaries) who customarily work less than five months in a calendar year or are customarily scheduled to work less than 20 hours per week will not be eligible to participate in the ESPP. Finally, an employee who owns (or is deemed to own through attribution) 5% or more of the combined voting power or value of all our classes of stock or of one of our subsidiaries will not be allowed to participate in the ESPP.
Participation. Employees will enroll under the ESPP by completing a payroll deduction form permitting the deduction from their compensation of at least 1% of their compensation but not more than 15% of their compensation. Such payroll deductions will be expressed as a whole number percentage, and the accumulated deductions will be applied to the purchase of shares on each purchase date. However, a participant may not purchase more than such whole number of shares determined by dividing $12,500 by the fair market value of a share of common stock on the grant date in each purchase period and, under the Section 423 component, may not accrue the right to purchase shares of common stock at a rate that exceeds $25,000 in fair market value of shares of our common stock (determined at the time the option is granted) for each calendar year the option is outstanding (as determined in accordance with Section 423 of the Code). The ESPP administrator has the authority to change the per purchase period limitation for any subsequent offering period.
Offering. Under the ESPP, participants are offered the option to purchase shares of our common stock at a discount during a series of successive, overlapping offering periods of twelve months, each comprised of six-month purchase periods. The first offering period will commence on the date the registration statement of which this prospectus forms a part becomes effective and will end on November 15, 2021, with the first purchase period thereunder ending on May 15, 2021 and the second purchase period thereunder ending on November 15, 2021. Offering periods thereafter will commence on each May 16 and November 16. The ESPP administrator may change the duration and timing of offering periods in its discretion. However, in no event may an offering period be longer than 27 months in length. In addition, if
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the fair market value of a share of common stock on any exercise date is lower than the fair market value of a share of common stock on the grant date of an offering period, then the offering period will automatically terminate, and each participant will automatically be enrolled in the next offering period.
The option purchase price will be the lower of 85% of the closing trading price per share of our common stock on the first day of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date, which will occur on the last day of each purchase period.
Unless a participant has previously canceled his or her participation in the ESPP before the purchase date, the participant will be deemed to have exercised his or her option in full as of each purchase date. Upon exercise, the participant will purchase the number of whole shares that his or her accumulated payroll deductions will buy at the option purchase price, subject to the participation limitations listed above.
A participant may cancel his or her payroll deduction authorization at any time prior to the end of the offering period. Upon cancellation, the participant will receive a refund of the participant’s account balance in cash without interest. Following at least one payroll deduction, a participant may also decrease (but not increase) his or her payroll deduction authorization once during any purchase period. If a participant wants to increase or decrease the rate of payroll withholding, he or she may do so effective for the next offering period by submitting a new form before the offering period for which such change is to be effective.
A participant may not assign, transfer, pledge or otherwise dispose of (other than by will or the laws of descent and distribution) payroll deductions credited to a participant’s account or any rights to exercise an option or to receive shares of our common stock under the ESPP, and during a participant’s lifetime, options in the ESPP will be exercisable only by such participant. Any such attempt at assignment, transfer, pledge or other disposition will not be given effect.
Adjustments upon Changes in Recapitalization, Dissolution, Liquidation, Merger or Asset Sale. In the event of any increase or decrease in the number of issued shares of our common stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock, or any other increase or decrease in the number of shares of common stock effected without receipt of consideration by us, we will proportionately adjust the aggregate number of shares of our common stock offered under the ESPP, the number and price of shares which any participant has elected to purchase under the ESPP and the maximum number of shares which a participant may elect to purchase in any single offering period. If there is a proposal to dissolve or liquidate us, then the ESPP will terminate immediately prior to the consummation of such proposed dissolution or liquidation, and any offering period then in progress will be shortened by setting a new purchase date to take place before the date of our dissolution or liquidation. We will notify each participant of such change in writing at least 10 business days prior to the new exercise date. If we undergo a merger with or into another corporation or sell all or substantially all of our assets, each outstanding option will be assumed or an equivalent option substituted by the successor corporation or the parent or subsidiary of the successor corporation. If the successor corporation refuses to assume the outstanding options or substitute equivalent options, then any offering period then in progress will be shortened by setting a new purchase date to take place before the date of our proposed sale or merger. We will notify each participant of such change in writing at least 10 business days prior to the new exercise date.
Amendment and Termination. Our board of directors may amend, suspend or terminate the ESPP at any time. However, the board of directors may not amend the ESPP without obtaining stockholder approval within twelve months before or after such amendment to the extent required by applicable laws.
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Compensation Risk Assessment
In connection with the registration statement of which this prospectus forms a part, management conducted a risk assessment of our compensation plans and practices and concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the company. The objective of the assessment was to identify any compensation plans or practices that may encourage employees to take unnecessary risk that could threaten the company. No such plans or practices were identified. The board of directors has reviewed and agrees with management’s conclusion.
Director Compensation
Non-Employee Director Compensation Policy
We maintain a non-employee director compensation policy, which was last amended and restated in November 2018. Pursuant to the policy, our directors who are neither (i) employees of the company nor (ii) employees or other service providers of any stockholder who has a contractual right to nominate directors, referred to as our non-employee directors, are eligible to receive the following cash and equity compensation for their service on our board of directors:
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Each non-employee director receives an annual cash retainer in the amount of $50,000 per year. |
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The lead independent director receives an additional cash retainer of $25,000 per year, and the chairman of the board of directors receives an additional cash retainer of $50,000 per year. |
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The chairperson of the audit, risk and compliance committee receives an additional annual cash retainer in the amount of $25,000 per year for such chairperson’s service on the audit, risk and compliance committee. Each non-chairperson member of the audit, risk and compliance committee receives an additional annual cash retainer in the amount of $15,000 per year for such member’s service on the audit, risk and compliance committee. |
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The chairperson of the leadership development, belonging and compensation committee receives an additional annual cash retainer in the amount of $25,000 per year for such chairperson’s service on the leadership development, belonging and compensation committee. Each non-chairperson member of the leadership development, belonging and compensation committee receives an additional annual cash retainer in the amount of $12,500 per year for such member’s service on the leadership development, belonging and compensation committee. |
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The chairperson of the nominating and corporate governance committee receives an additional annual cash retainer in the amount of $20,000 per year for such chairperson’s service on the nominating and corporate governance committee. Each non-chairperson member of the nominating and corporate governance committee receives an additional annual cash retainer in the amount of $10,000 per year for such member’s service on the nominating and corporate governance committee. |
Under our non-employee director compensation policy, upon a non-employee director’s initial appointment to the board of directors, he or she receives an initial RSU award and an initial option award. The initial RSU award covers a number of shares of the Class B common stock valued at $250,000 based on the company’s then-current per share fair market value, multiplied by a fraction, the numerator of which is the number of full calendar months between his or her appointment and ending on the next May 25th, and the denominator of which is 12. The initial RSU award is subject to a service-based vesting condition and a liquidity-based vesting condition. The service-based vesting condition is satisfied as to the 1/4th of the RSUs on the first February 25th, May 25th, August 25th or November 25th following appointment (each, a
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“quarterly installment date”), and as to 1/4th of the RSUs on each quarterly anniversary thereafter, subject to continued service with us. The liquidity-based vesting condition is satisfied as described above under “Compensation Discussion and Analysis — Elements of Our Executive Compensation Program — Equity Compensation.” The initial option award covers a number of shares of the Class B common stock equal to $500,000 divided by the product of 0.5 and the company’s then-current per share fair market value and vests as to 1/24th of the shares each month following the date of grant, subject to continued service with us. In addition, at the first board of directors meeting following May 25th of each year or as otherwise determined by the board of directors, each non-employee director receives an annual award of RSUs covering a number of shares of the Class B common stock valued at $250,000 based on the company’s then-current per share fair market value, which annual award vests in the same manner as the initial RSU award. All equity awards granted under our non-employee director compensation policy vest in full in the event of an acquisition of the company. Further, all equity awards granted under our non-employee director compensation policy are subject to the approval of a majority of directors who are not non-employee directors.
Under our non-employee director compensation policy, non-employee directors may elect to receive his or her annual cash fees in the form of RSUs, which award will be granted and vest in the same manner as the annual RSU award.
We do not provide any compensation to our directors who are also employees. Mr. Chesky’s 2019 compensation for his service as our Chief Executive Officer and President is set forth in the Summary Compensation Table above. Messrs. Gebbia and Blecharczyk are executive officers who are not named executive officers and do not receive any additional compensation for their services as directors.
Director Compensation Table for 2019
The following table contains information concerning the compensation of our non-employee directors in 2019. Messrs. Jordan and Lin did not receive any compensation for their service on our board of directors because each is an employee of a stockholder who has a contractual right to nominate directors to our board of directors.
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) |
Total ($) |
||||||||||||||||||||
| Angela Ahrendts(3) |
|
33,561 |
|
249,889 |
|
418,155 |
|
701,605 | ||||||||||||||||
| Kenneth Chenault |
|
65,000 |
|
249,889 |
|
— |
|
314,889 | ||||||||||||||||
| Jeffrey Jordan |
|
— |
|
— |
|
— |
|
— | ||||||||||||||||
| Alfred Lin |
|
— |
|
— |
|
— |
|
— | ||||||||||||||||
| Ann Mather |
|
90,000 |
|
249,889 |
|
— |
|
339,889 |
| (1) |
Each of Ms. Ahrendts, Mr. Chenault and Ms. Mather elected to receive RSUs in lieu of cash compensation under our non-employee director compensation policy for 2019. Amounts reflect the cash fees foregone at the election of the director to receive the following RSUs awards, which were granted in May 2019: Ms. Ahrendts: 538 RSUs; Mr. Chenault: 1,026 RSUs; and Ms. Mather: 1,420 RSUs. |
| (2) |
Amounts reflect the grant-date fair value of stock awards and option awards granted during 2019 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. During 2019, Ms. Ahrendts, Mr. Chenault and Ms. Mather were granted RSUs that are subject to both service-based and liquidity-based vesting conditions. The grant-date fair value of RSUs granted in 2019 reported in the table above assumes achievement of the liquidity-based vesting condition. Note that while the grant-date fair value assuming achievement of the liquidity-based vesting condition is included in the table above, the achievement of the liquidity-based vesting condition was not deemed probable on the date of grant. See Note 12 to our consolidated financial statements included elsewhere in this prospectus for the assumptions used in calculating these values. |
| (3) |
Ms. Ahrendts was appointed as a member of our board of directors effective May 1, 2019. |
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The table below shows the aggregate numbers of option awards (exercisable and unexercisable) and unvested stock awards held as of December 31, 2019 by each non-employee director.
| Name | Options Outstanding at Year End |
RSUs Outstanding at Year End |
||||||||||||||
| Angela Ahrendts |
|
|
|
15,798 |
|
|
|
4,486 | ||||||||
| Kenneth Chenault |
|
|
|
16,692 |
|
|
|
10,332 | ||||||||
| Jeffrey Jordan |
|
|
|
— |
|
|
|
— | ||||||||
| Alfred Lin |
|
|
|
— |
|
|
|
— | ||||||||
| Ann Mather |
|
|
|
16,692 |
|
|
|
8,496 |
On July 7, 2020, we granted 10,216, 10,726, and 11,578 RSUs subject to both service-based and liquidity-based vesting conditions to Ms. Ahrendts, Mr. Chenault, and Ms. Mather, respectively, pursuant to our non-employee director compensation policy, each of which includes both annual RSUs and RSUs granted in lieu of cash fees at the election of the non-employee director. The service-based vesting condition for the RSUs granted to the non-employee directors is satisfied as to 1/4th of the RSUs on each quarterly anniversary of May 25, 2020, subject to the non-employee director’s continued service with us. The liquidity-based vesting condition for the RSUs will be satisfied as described above.
New Non-Employee Director Compensation Policy
In connection with this offering, we amended and restated our non-employee director compensation policy, which will become effective as of the date the registration statement of which this prospectus forms a part becomes effective. All directors who are not employees of the company will be eligible to receive compensation pursuant to the amended and restated policy.
The cash compensation under the amended and restated policy remains the same as under the existing policy, except that the chairperson of the audit, risk and compliance committee will receive an additional annual cash retainer of $40,000, the chairperson of the leadership development, belonging and compensation committee will receive an additional annual cash retainer of $37,500 and the chairperson of the nominating and corporate governance committee will receive an additional annual cash retainer of $30,000. In addition, the chairperson of our newly formed stakeholder committee will receive an additional annual cash retainer of $37,500, and each non-chairperson member of the stakeholder committee will receive an additional annual cash retainer of $12,500.
Under the amended and restated policy, in the event a non-employee director is appointed to the board of directors on a date other than May 25, he or she will receive an initial award of RSUs covering a number of shares of the Class A common stock valued at $300,000 based on the company’s then-current per share fair market value, multiplied by a fraction, the numerator of which is the number of days from and including his or her appointment until the next May 25th, and the denominator of which is 365. The initial RSU award will vest in full on the May 25 following the date of grant, subject to continued service on the board of directors. In addition, on each May 25, each non-employee director will automatically be granted an annual award of RSUs covering a number of shares of the Class A common stock valued at $300,000 based on the company’s then-current per share fair market value, which annual award will vest in full on the first anniversary of the grant date, subject to continued service on the board of directors. No options will be granted under the amended and restated policy. All RSUs granted under the amended and restated policy vest in full in the event of a change in control of the company. In addition, non-employee directors may elect to receive their annual cash fees in the form of RSUs, which award will be granted and vest in the same manner as the initial RSU award, if such election is made in connection with the director’s initial appointment to the board of directors, or else the annual RSU award.
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Settlement of Outstanding Director RSUs
In connection with this offering, our board of directors determined to permit non-employee directors to elect to have a portion of their RSUs settled in cash in lieu of shares in order to help offset the tax liability arising from the settlement of the RSUs. Any such election will apply to any RSUs vesting in connection with the offering or within one year thereafter.
Settlement of Equity Awards
As described below under “Description of Capital Stock — Equity Award Amendment,” in connection with this offering, our board of directors amended outstanding equity awards granted under our 2008 Plan and 2018 Plan so that such awards will settle in shares of Class A common stock instead of Class B common stock in connection with and after this offering, excluding the stock options held by individuals holding at least 1% of our outstanding capital stock.
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Certain Relationships and Related Party Transactions
The following includes a summary of transactions since January 1, 2017 and any currently proposed transactions to which we were or are expected to be a participant in which (i) the amount involved exceeded or will exceed $120,000, and (ii) any of our directors, executive officers, or holders of more than 5% of our capital stock, or any affiliate or member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described under the sections titled “Compensation Discussion and Analysis” and “Executive and Director Compensation” and the registration rights described in the section titled “Description of Capital Stock — Registration Rights.”
Stock Transfer Agreement
We entered into a Stock Transfer Agreement with SLP Constellation Aggregator II, L.P. (“SLP”) and Belinda Johnson, our former Chief Operating Officer and one of our directors, dated as of May 21, 2020, pursuant to which Ms. Johnson sold 933,648 shares of our Class B common stock to SLP for an aggregate purchase price of $27,411,905 in order to pay the exercise price for certain stock options held by Ms. Johnson and to cover certain related tax obligations.
Investors’ Rights Agreement
We are party to an Amended and Restated Investors’ Rights Agreement, dated as of April 17, 2020 (“Investors’ Rights Agreement”), with certain holders of our capital stock and warrants. This agreement provides, among other things, that certain holders of our capital stock and warrants have the right to request that we file a registration statement, and/or request that their shares be covered by a registration statement that we are otherwise filing, subject to certain exceptions. See the section titled “Description of Capital Stock — Registration Rights” for additional information regarding these registration rights.
Nominating Agreement
We and Messrs. Blecharczyk, Chesky, and Gebbia, referred to in this prospectus as our founders, will enter into a Nominating Agreement effective prior to the completion of this offering (“Nominating Agreement”), under which we and the founders are required, upon the terms set forth in the Nominating Agreement, to (i) include our founders in the slate of nominees nominated by our board of directors for the applicable class of directors for election by our stockholders, and (ii) include such nomination of our founders in our proxy statement. In addition, we must use reasonable efforts to, and the founders must take all necessary action to, recommend in favor of each founder’s election as a director, and to solicit proxies or consents in favor of their election. The obligations with respect to each founder will terminate upon the earliest to occur of (1) such founder’s resignation from our board of directors, (2) such founder’s death or disability, (3) such founder’s removal from our board of directors for cause, (4) the expiration of such founder’s term if such founder has given notice of his intention not to stand for re-election, and (5) the date upon which the number of shares of our common stock owned by such founder falls below ten percent of the number of shares of common stock owned by such founder as of September 30, 2020. The Nominating Agreement will remain in effect until the earliest of (a) the date on which our and the founders’ obligations have terminated with respect to all of the founders, (b) the time at which all outstanding shares of Class B
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common stock automatically convert to Class A common stock, and (c) immediately prior to a change of control. The conversion of our Class B common stock to Class A common stock is provided for in our restated certificate of incorporation, see section titled “Description of Capital Stock—Class A, B, C and H Common Stock—Conversion.”
Voting Agreements
Amended and Restated Voting Agreement
We are party to an Amended and Restated Voting Agreement, dated as of November 22, 2019 (“Voting Agreement”), under which certain holders of our capital stock have agreed to vote their shares on certain matters, including with respect to the election of directors. In connection with this offering, the Voting Agreement will terminate and none of our stockholders will have any special rights regarding the election or designation of members of our board of directors, the voting of our capital stock, or the restrictions on transfer pursuant to the agreement.
Amended and Restated Series B/C Founder Voting Agreement
We are party to an Amended and Restated Series B/C Founder Voting Agreement, dated as of December 5, 2012 (the “B/C Founder Voting Agreement”) with our founders and certain holders of our Series B redeemable convertible preferred stock and Series C redeemable convertible preferred stock. Voting on certain matters is currently governed by the B/C Founder Voting Agreement and the related provisions of our current restated certificate of incorporation. Pursuant to the B/C Founder Voting Agreement, each stockholder party thereto agreed that each of our founders, Brian Chesky, Nathan Blecharczyk and Joseph Gebbia, has an undivided right to vote one-third of such stockholder’s shares in such founder’s sole discretion on all matters submitted to a vote of the stockholders except for the following actions, all as described more fully in the B/C Founder Voting Agreement:
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the alteration, change or waiver of the rights, preferences, privileges or restrictions of the Series B redeemable convertible preferred stock so as to adversely affect such Series B redeemable convertible preferred stock by amending or waiving any of the provisions of our restated certificate of incorporation; |
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the alteration, change or waiver of the rights, preferences, privileges or restrictions of the Series C redeemable convertible preferred stock so as to adversely affect such Series C redeemable convertible preferred stock by amending or waiving any of the provisions of our restated certificate of incorporation; |
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the voluntary election to convert any shares of Series B redeemable convertible preferred stock to Class A common stock pursuant to the conversion provisions of our restated certificate of incorporation; |
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the voluntary election to convert any shares of Series C redeemable convertible preferred stock to Class A common stock pursuant to the conversion provisions of our restated certificate of incorporation; |
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any amendment, restatement, alteration, repeal or waiver of any provision of that certain Series B Preferred Stock Purchase Agreement, dated as of July 22, 2011, by and among us and the investors party thereto, that certain Series C Preferred Stock Purchase Agreement, dated as of December 5, 2012, by and among us and the investors party thereto, or that certain Amended and Restated Investors’ Rights Agreement, Amended and Restated Right of First Refusal and Co-Sale Agreement, or |
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| Amended and Restated Voting Agreement, each dated as of December 5, 2012, by and among us and the investors party thereto; and |
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any amendment or waiver of the B/C Founder Voting Agreement. |
In connection with this offering, the B/C Founder Voting Agreement will terminate and the provisions of our current restated certificate of incorporation by which our stockholders vote will be amended and restated.
Amended and Restated Series D/E/F Founder Voting Agreement
We are party to an Amended and Restated Series D/E/F Founder Voting Agreement, dated as of July 28, 2016 (the “D/E/F Founder Voting Agreement”) with our founders and certain holders of our Series D redeemable convertible preferred stock, Series E redeemable convertible preferred stock, and Series F redeemable convertible preferred stock. Voting on certain matters is currently governed by the D/E/F Founder Voting Agreement and the related provisions of our current restated certificate of incorporation. Pursuant to the D/E/F Founder Voting Agreement, each stockholder party thereto agreed to vote such stockholder’s shares as directed by each of our founders with one-third of such stockholder’s shares being directed by each of the three founders; provided that each of the following actions is approved by at least a majority of the members of our board of directors, all as described more fully in the D/E/F Founder Voting Agreement:
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sale or other disposition of all or substantially all of our assets; |
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mergers of, or acquisitions by, us or our subsidiaries that are submitted for stockholder approval, including a Deemed Liquidation Event; |
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adoption of an equity incentive plan, restricted stock unit plan, stock option plan, or similar incentive plan (“Incentive Plan”), or an amendment to our existing Incentive Plan, including an increase in the total number of shares reserved thereunder; |
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authorization of an increase in the authorized number of shares of common stock or any new or existing shares of redeemable convertible preferred stock or series of redeemable convertible preferred stock (other than the Series D redeemable convertible preferred stock, Series E redeemable convertible preferred stock, and Series F redeemable convertible preferred stock), or the authorization, designation, or issuance of such shares; |
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any amendment, restatement, alteration, repeal, or waiver of (a) any provision of that certain Series F Preferred Stock Purchase Agreement, dated as of July 28, 2016, by and among us and the investors party thereto or the Investors’ Rights Agreement, Right of First Refusal and Co-Sale Agreement (as defined below), Voting Agreement, or Transfer Restrictions Agreement, dated July 28, 2016, by and among us and the investors party thereto, and the D/E/F Founder Voting Agreement (each, a “Transaction Agreement”), solely to provide for the joinder of any new or additional investors or other parties to such Transaction Agreement as parties thereto and/or to subject shares of any new or existing class or series of our capital stock to such agreement, and (b) any provision of the D/E/F Founder Voting Agreement, if such amendment, restatement, alteration, repeal, or waiver does not (1) materially change the primary nature of the amended and restated voting agreement as a voting agreement among stockholders or (2) provide for a “drag-along” or similar agreement requiring the stockholders to vote or sell their shares in connection with a Deemed Liquidation Event or a similar transaction; and |
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any amendment, restatement, alteration, repeal, or waiver of our restated certificate of incorporation to change the number of shares of common stock deemed to be exempted securities in connection with an adoption or amendment of an Incentive Plan or an amendment to our existing Incentive Plan. |
In connection with this offering, the D/E/F Founder Voting Agreement will terminate and the provisions of our current restated certificate of incorporation by which our stockholders vote will be amended and restated.
Right of First Refusal and Co-Sale Agreement
We are party to an Amended and Restated Right of First Refusal and Co-Sale Agreement, dated as of April 17, 2020 (“Right of First Refusal and Co-Sale Agreement”), with certain holders of our capital stock. This agreement provides for rights of first refusal and co-sale relating to the shares of our common stock held by certain parties to the agreement. In connection with this offering, the Right of First Refusal and Co-Sale Agreement will terminate.
Indemnification Agreements
We have entered into indemnification agreements with certain of our current directors and officers, and intend to enter into new indemnification agreements with each of our current directors and officers. Our restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by applicable law. See the section titled “Management — Limitation on Liability and Indemnification Matters.”
Contributions to Support Company Initiatives
Brian Chesky, our Chief Executive Officer, Head of Community, Co-Founder, and Director made a capital contribution to us of $10.1 million in order to support certain of our charitable commitments and initiatives, including our fund for Superhosts and our Frontline Stays initiative, in 2020.
Joseph Gebbia, our Chairman of Samara and Airbnb.org, Co-Founder, and Director made a capital contribution to us of $4.5 million in order to support certain of our charitable commitments and initiatives, including our fund for Superhosts, in 2020.
Employment Arrangement with an Immediate Family Member of Our Director
Alison Jordan, the daughter of Jeffrey Jordan, a member of our board of directors, has served as a Strategic Partnerships Coordinator from July 2017 to May 2020 and a Policy Program Manager since May 2020. Ms. Jordan’s compensation was based on reference to external market practice of similar positions or internal pay equity when compared to the compensation paid to employees in similar positions who were not related to our director, Mr. Jordan. Ms. Jordan’s equity awards were granted on the same general terms and conditions as applicable to employees in similar positions who were not related to our director, Mr. Jordan. Mr. Jordan plays no personal role in determining his daughter’s compensation or reviewing his daughter’s performance. Mr. Jordan does not receive a direct or indirect benefit from his daughter’s position with us.
Directed Share Program
At our request, the underwriters have reserved up to shares of Class A common stock, or % of the shares offered by this prospectus, for sale at the initial public offering price through a directed share
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program to eligible U.S. hosts and certain individuals identified by our officers and directors. For hosts, those who reside in the United States and had by November 1, 2020 accepted a reservation that began, or was scheduled to begin, in 2019 or 2020 are potentially eligible for the program. Airbnb employees are not eligible. If demand for the program exceeds capacity, we may invite hosts to participate based on tenure, as determined by the year they first hosted on Airbnb. Morgan Stanley & Co. LLC will administer our directed share program and receive concessions as described in the section titled “Underwriting—Directed Share Program.”
Policies and Procedures for Related Party Transactions
Our board of directors has adopted a written related party transaction policy, to be effective upon the completion of this offering, setting forth the policies and procedures for the review and approval or ratification of related party transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related party had or will have a direct or indirect material interest, including without limitation purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related party. In reviewing and approving any such transactions, the chair of our audit, risk and compliance committee is tasked to consider all relevant facts and circumstances, including but not limited to whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction with an unrelated third party and the extent of the related party’s interest in the transaction. All such approved transactions must be ratified by the audit, risk and compliance committee, taking into account the foregoing considerations, during the meetings held at least once during each fiscal quarter. All of the transactions described in this section occurred prior to the adoption of this policy.
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Principal and Selling Stockholders
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of September 30, 2020, and as adjusted for the two-for-one stock split of our outstanding common stock and redeemable convertible preferred stock effected on October 26, 2020, and to reflect our sale of our Class A common stock in this offering, for:
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each of our executive officers; |
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each of our directors; |
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all of our executive officers and directors as a group; |
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each person known by us to be the beneficial owner of more than five percent of any class of our voting securities; and |
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each of the selling stockholders. |
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned as of September 30, 2020, subject to community property laws where applicable. We have deemed shares of our common stock subject to stock options that are currently exercisable or will be exercisable within 60 days of September 30, 2020 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person. However, we did not deem these shares subject to stock options outstanding for the purpose of computing the percentage ownership of any other person or entity.
We have based percentage ownership of our common stock before this offering on 17,455,568 shares of our Class A common stock as of September 30, 2020, 490,889,234 shares of our Class B common stock outstanding as of September 30, 2020, which includes 240,910,588 shares of Class B common stock resulting from the conversion of all outstanding shares of our redeemable convertible preferred stock, of which 239,623,894 shares are outstanding as of September 30, 2020, in connection with the closing of this offering, as if this conversion had occurred as of September 30, 2020, no shares of Class C common stock outstanding as of September 30, 2020, and 9,200,000 shares of Class H common stock issued to our wholly-owned Host Endowment Fund subsidiary in November 2020. The percentage ownership of our common stock after this offering also assumes the foregoing and the issuance and sale of shares by us in this offering, the sale of shares by the selling stockholders, and does not include the exercise of the underwriters’ option to purchase additional shares. In addition, the following table does not reflect any shares of Class A common stock that may be purchased in this offering or pursuant to our directed share program described under “Underwriting — Directed Share Program.”
In connection with this offering, our board of directors amended all awards outstanding under our 2008 Plan and 2018 Plan to settle into Class A common stock, excluding the stock options held by individuals holding at least 1% of our outstanding capital stock (the “Equity Award Amendment”). Holders of Class A common stock received as a result of the Equity Award Amendment have the right to exchange on one occasion such shares of Class A common stock for an equal number of shares of Class B common stock until such time as the Class A common stock is transferred. This amendment did not affect the amounts
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shown in the table below in “Shares Beneficially Owned Prior to this Offering.” RSUs that meet the liquidity condition and vest upon the completion of this offering, and Class A common stock subject to stock options exercisable within 60 days of September 30, 2020, excluding the options held by Messrs. Blecharczyk, Chesky, and Gebbia, are shown in the table below as Class A common stock in “Shares Beneficially Owned After this Offering.” See “Description of Capital Stock — Equity Award Amendment.”
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Airbnb, Inc., 888 Brannan Street, San Francisco, California 94103.
| Shares Beneficially Owned Prior to this Offering |
% of Voting Power Before this Offering |
Number of Shares of Class A Common Stock Being Offered |
Shares Beneficially Owned After this Offering |
% of Voting Power After this Offering |
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| Class A | Class B | Class H | Class A | Class B | Class H | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name of Beneficial Owner | Shares | % | Shares | % | Shares | % | Shares | % | Shares | % | Shares | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Officers and Directors: |
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| Brian Chesky(1) |
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— | — | 76,938,518 | 15.4 | % | — | — | 15.3 | % |
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| Nathan Blecharczyk(2) |
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— | — | 70,093,067 | 14.2 | % | — | — | 14.2 | % |
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| Joseph Gebbia(3) |
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— | — | 70,093,135 | 14.2 | % | — | — | 14.2 | % |
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| Dave Stephenson(4) |
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— | — | 46,666 | * | — | — | * |
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| Aristotle Balogh(5) |
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— | — | 152,496 | * | — | — | * |
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| Greg Greeley(6) |
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— | — | 277,776 | * | — | — | * |
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| Catherine Powell(7) |
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— | — | 37,916 | * | — | — | * |
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| Angela Ahrendts(8) |
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— | — | 11,848 | * | — | — | * |
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| Kenneth Chenault(9) |
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— | — | 1,526,160 | * | — | — | * |
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| Belinda Johnson(10) |
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— | — | 2,531,978 | * | — | — | * |
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| Jeffrey Jordan |
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| Alfred Lin(11) |
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| Ann Mather(12) |
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— | — | 16,692 | * | — | — | * |
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| All current executive officers and directors as a group (13 persons)(13) |
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— | — | 221,726,252 | 43.8 | % | — | — | 43.6 | % |
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| Entities Affiliated with Sequoia Capital(14) |
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691,612 | 4.0 | % | 81,277,532 | 16.6 | % | — | — | 16.5 | % |
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| Entities Affiliated with Founders Fund(15) |
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— | — | 26,556,110 | 5.4 | % | — | — | 5.4 | % |
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| Entities Affiliated with Silver Lake(16) |
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5,026,804 | 23.5 | % | — | — | — | — | * |
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| Entities Affiliated with Sixth Street(17) |
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3,967,398 | 18.5 | % | — | — | — | — | * |
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| Entities Affiliated with DST Global (18) |
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3,053,922 | 17.5 | % | 11,093,112 | 2.3 | % | — | — | 2.3 | % |
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| Jonathan Poulin and Affiliated Entities(19) |
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2,279,756 | 13.1 | % | — | — | — | — | * |
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| Entities Affiliated with Greystar Real Estate Partners(20) |
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936,052 | 5.4 | % | — | — |
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| Entities Affiliated with Accel(21) |
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919,308 | 5.3 | % | — | — |
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| Airbnb Host Endowment LLC(22) |
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— | — | — | — | 9,200,000 | 100.0 | % | — |
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— | — | — | — | 9,200,000 | 100.0 | % | — | ||||||||||||||||||||||||||||||||||||||||||
| Other Selling Stockholders: |
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Represents less than 1%. |
| (1) |
Consists of: (i) 65,720,676 shares of Class B common stock held of record by Brian Chesky; (ii) 246,686 shares of Class B common stock held of record by Deborah Chesky, as Trustee of the Brian Chesky 2019 Grantor Retained Annuity Trust I created under Agreement dated as of February 15, 2019; (iii) 473,718 shares of Class B common stock held of record by Brian Chesky, as Trustee of the Brian Chesky 2019 Grantor Retained Annuity Trust II created under Agreement dated as of February 15, 2019; (iv) 130,478 shares of Class B common stock held of record by Deborah Chesky, as Trustee of the Brian Chesky 2019 Grantor Retained Annuity Trust III created under Agreement dated as of July 31, 2019; (v) 130,478 shares of Class B common stock held of record by Brian Chesky, as Trustee of the Brian Chesky 2019 Grantor Retained Annuity Trust IV created under Agreement dated as of July 8, 2019; (vi) 514,314 shares of Class B common stock held of record by Deborah Chesky, as Trustee of the Brian Chesky 2020 Grantor Retained Annuity Trust A; (vii) 514,314 shares of Class B common stock held of record by Brian Chesky, as Trustee of the Brian Chesky 2020 Grantor Retained Annuity Trust B; (viii) 15,266 shares of Class B common stock held of record by Deborah Chesky and Robert Joseph St. Aubin, as Trustees of Allison’s Trust created under The Brian Chesky 2016 Long-Term Trust Agreement dated as of July 26, 2016; and (ix) 9,192,588 shares of Class B common stock subject to a stock option held by Mr. Chesky that is exercisable within 60 days of September 30, 2020. Does not reflect a possible personal contribution of shares to support the Host Endowment Fund, which may be valued at over $100 million at the time of the contribution. |
| (2) |
Consists of: (i) 8,021,444 shares of Class B common stock held by Nathan Blecharczyk, as Trustee of the Nathan Blecharczyk 2015 GRAT; (ii) 13,600,000 shares of Class B common stock held by Nathan Blecharczyk, as Trustee of the Nathan Blecharczyk 2020 GRAT; (iii) 45,338,040 shares of Class B common stock held by the Blecharczyk Revocable Trust; (iv) 786,446 shares of Class B common stock held of record by Gioacchino Curiale, as Trustee of the Blecharczyk 2015 Irrevocable Trust; (v) 2,333,142 shares of Class B common stock subject to stock options held by Mr. Blecharczyk that are exercisable within 60 days of September 30, 2020; and (vi) 13,995 shares of Class B common stock issuable upon the settlement of restricted stock units held by Mr. Blecharczyk that will vest within 60 days of September 30, 2020. |
| (3) |
Consists of: (i) 61,745,998 shares of Class B common stock held of record by The Sycamore Trust, for which Mr. Gebbia is a trustee; (ii) 1,000,000 shares of Class B common stock held of record by Guernica LLC; (iii) 2,000,000 shares of Class B common stock held of record by Guernica 2, LLC; (iv) 3,000,000 shares of Class B common stock held of record by Guernica 3, LLC; (v) 2,333,142 shares of Class B common stock subject to stock options held by Mr. Gebbia that are exercisable within 60 days of September 30, 2020; and (vi) 13,995 shares of Class B common stock issuable upon the settlement of restricted stock units held by Mr. Gebbia that will vest within 60 days of September 30, 2020. The Sycamore Trust acquired beneficial ownership over the shares it currently holds subsequent to September 30, 2020, from another trust for which Mr. Gebbia is a trustee. Mr. Gebbia is the owner of each of Guernica LLC, Guernica 2, LLC and Guernica 3, LLC. |
| (4) |
Consists of 46,666 shares of Class B common stock subject to a stock option held by Mr. Stephenson that is exercisable within 60 days of September 30, 2020. |
| (5) |
Consists of 152,496 shares of Class B common stock subject to stock options held by Mr. Balogh that are exercisable within 60 days of September 30, 2020. |
| (6) |
Consists of 277,776 shares of Class B common stock subject to stock options held by Mr. Greeley that are exercisable within 60 days of September 30, 2020. |
| (7) |
Consists of 37,916 shares of Class B common stock subject to a stock option held by Ms. Powell that is exercisable within 60 days of September 30, 2020. |
| (8) |
Consists of 11,848 shares of Class B common stock subject to a stock option held by Ms. Ahrendts that is exercisable within 60 days of September 30, 2020. |
| (9) |
Consists of: (i) 1,470,456 shares of Class B common stock held of record by General Catalyst Group IV, L.P.; (ii) 39,012 shares of Class B common stock held by GC Entrepreneurs Fund IV, L.P.; and (iii) 16,692 shares of Class B common stock subject to a stock option held by Mr. Chenault that is exercisable within 60 days of September 30, 2020. Mr. Chenault is a Managing Director within the General Catalyst group and may be deemed to have shared voting, investment and dispositive power with respect to the shares held by these entities. The principal business address of Mr. Chenault and these entities is 20 University Road, Suite 450, Cambridge, Massachusetts 02138. |
| (10) |
Consists of: (i) 1,510,872 shares of Class B common stock held of record by Belinda J. Johnson and William Brent Johnson, Trustees of the Johnson Family Trust U/A/D 06/21/2005; (ii) 56,984 shares of Class B common stock held by Belinda J. Johnson as Trustee of The Belinda J. Johnson 2015 Grantor Retained Annuity Trust; (iii) 56,984 shares of Class B common stock held of record by W. Brent Johnson as Trustee of The W. Brent Johnson 2015 Grantor Retained Annuity Trust; and (iv) 907,138 shares of Class B common stock subject to stock options held by Ms. Johnson that are exercisable within 60 days of September 30, 2020. |
| (11) |
Mr. Lin does not have beneficial ownership of the shares held by the entities affiliated with Sequoia Capital identified in footnote 14. |
| (12) |
Consists of 16,692 shares of Class B common stock subject to a stock option held by Ms. Mather that is exercisable within 60 days of September 30, 2020. |
| (13) |
Consists of: (i) 206,372,166 shares of Class B common stock; (ii) 15,326,096 shares of Class B common stock subject to stock options that are exercisable within 60 days of September 30, 2020; and (iii) 27,990 shares of Class B common stock issuable upon the settlement of restricted stock units that will vest within 60 days of September 30, 2020. |
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| (14) |
Consists of: (i) 60,716,820 shares of Class B common stock held of record by Sequoia Capital XII, L.P. (“SC XII”); (ii) 6,489,252 shares of Class B common stock held of record by Sequoia Capital XII Principals Fund, LLC (“SC XII PF”); (iii) 2,271,924 shares of Class B common stock held of record by Sequoia Technology Partners XII, L.P. (“STP XII”); (iv) 6,098,400 shares of Class B common stock held of record by SC US GF V Holdings, Ltd. (“US GF V Holdco”); (v) 102,816 shares of Class A common stock and 192,006 shares of Class B common stock held of record by Sequoia Capital U.S. Growth Fund VII, L.P. (“US GF VII”); (vi) 6,690 shares of Class A common stock and 12,496 shares of Class B common stock held of record by Sequoia Capital U.S. Growth VII Principals Fund, L.P. (“US GF VII PF”); (vii) 4,285,190 shares of Class B common stock held of record by Sequoia Capital Global Growth Fund, LP (“GGF”); (viii) 124,348 shares of Class B common stock held of record by Sequoia Capital Global Growth Principals Fund, LP (“GGF PF”); (ix) 575,004 shares of Class A common stock and 1,073,834 shares of Class B common stock held of record by Sequoia Capital Global Growth Fund II, L.P. (“GGF II”); and (x) 7,102 shares of Class A common stock and 13,262 shares of Class B common stock held of record by Sequoia Capital Global Growth II Principals Fund, L.P. (“GGF II PF”). SC XII Management, LLC (“SC XII LLC”) is the general partner of each of SC XII and STP XII, and the managing member of SC XII PF. As a result, SC XII LLC may be deemed to share voting and dispositive power with respect to the shares held by SC XII, SC XII PF, and STP XII. SC US (TTGP), Ltd. is: (i) the general partner of SCGF V Management, L.P., which is the general partner of Sequoia Capital U.S. Growth Fund V, L.P. and Sequoia Capital USGF Principals Fund V, L.P. (collectively, the “US GF V Funds”), which together own 100% of the outstanding ordinary shares of US GF V Holdco; (ii) the general partner of SC U.S. Growth VII Management, L.P., which is the general partner of each of US GF VII and US GF VII PF (collectively, the “SC US GF VII Funds”); (iii) the general partner of SCGGF Management, L.P., which is the general partner of each of GGF and GGF PF (collectively, the “SC GGF Funds”); and (iv) the general partner of SC Global Growth II Management, L.P., which is the general partner of each of GGF II and GGF II PF (collectively, the “SC GGF II Funds”). As a result, SC US (TTGP), Ltd. may be deemed to share voting and dispositive power with respect to the shares held by US GF V Holdco, the SC US GF VII Funds, the SC GGF Funds and the SC GGF II Funds. In addition, the directors and stockholders of SC US (TTGP), Ltd. who exercise voting and investment discretion with respect to the SC GGF Funds are Douglas M. Leone and James J. Goetz, and the directors and stockholders of SC US (TTGP), Ltd. who exercise voting and investment discretion with respect to the SC GGF II Funds are Douglas M. Leone and Roelof F. Botha. As a result, and by virtue of the relationships described in this paragraph, each such person may be deemed to share voting and dispositive power with respect to the shares held by the SC GGF Funds or SC GGF II Funds, as applicable. The address for each of these entities and individuals is 2800 Sand Hill Road, Suite 101, Menlo Park, California 94025. |
| (15) |
Consists of: (i) 207,016 shares of Class B common stock held of record by The Founders Fund II Entrepreneurs Fund, LP (“FF-IIE”); (ii) 338,616 shares of Class B common stock held of record by The Founders Fund II Principals Fund, LP (“FF-IIP”); (iii) 6,847,812 shares of Class B common stock held of record by The Founders Fund II, LP (“FF-II”); (iv) 44,144 shares of Class B common stock held of record by The Founders Fund III Entrepreneurs Fund, LP (“FF-IIIE”); (v) 858,436 shares of Class B common stock held of record by The Founders Fund III Principals Fund, LP (“FF-IIIP”); (vi) 2,416,974 shares of Class B common stock held of record by The Founders Fund III, LP (“FF-III”); (vii) 3,849,874 shares of Class B common stock held of record by The Founders Fund IV Principals Fund, LP (“FF-IVP”); and (viii) 11,993,238 shares of Class B common stock held of record by The Founders Fund IV, LP (“FF-IV”). Peter Thiel and Luke Nosek have shared voting and investment power over the shares held by each of FF-IIE, FF-IIP, FF-II, FF-IIIE, FF-IIIP, and FF-III. Peter Thiel and Brian Singerman have shared voting and investment power over the shares held by each of FF-IVP and FF-IV. The address of each of these entities and individuals is One Letterman Drive, Building D, 5th Floor, San Francisco, California 94129. |
| (16) |
Consists of: (i) 1,059,408 shares of Class A common stock held of record by SLP Constellation Aggregator II, L.P.; and (ii) 3,967,396 shares of Class A common stock subject to a warrant that is exercisable within 60 days of September 30, 2020 by SLP Constellation Aggregator II, L.P. The general partner of SLP Constellation Aggregator II, L.P. is SLP V Aggregator GP, L.L.C., and the managing member of SLP V Aggregator GP, L.L.C. is Silver Lake Technology Associates V, L.P. The general partner of Silver Lake Technology Associates V, L.P. is SLTA V (GP), L.L.C. and the managing member of SLTA V (GP), L.L.C. is Silver Lake Group, L.L.C. The managing members of Silver Lake Group, L.L.C. are Michael Bingle, Egon Durban, Kenneth Hao, Gregory Mondre and Joseph Osnoss. The business address for each of these entities is 2775 Sand Hill Road, Suite 100, Menlo Park, California 94025. |
| (17) |
Consists of: (i) 2,314,182 shares of Class A common stock subject to a warrant that is exercisable within 60 days of September 30, 2020 by TAO Finance 1, LLC; (ii) 991,850 shares of Class A common stock subject to a warrant that is exercisable within 60 days of September 30, 2020 by Redwood IV Finance 1, LLC; (iii) 370,840 shares of Class A common stock subject to a warrant that is exercisable within 60 days of September 30, 2020 by TCS Finance (A), LLC; and (iv) 290,526 shares of Class A common stock subject to a warrant that is exercisable within 60 days of September 30, 2020 by TCS Finance 1, LLC. TSSP Adjacent Opportunities GenPar, L.P. is the manager of TAO Finance 1, LLC. TSSP Opportunities GenPar IV, L.P. is the manager of Redwood IV Finance 1, LLC. TSSP Capital Solutions GenPar, L.P. is the manager of TCS Finance (A), LLC and TCS Finance 1, LLC. Each of TSSP Adjacent Opportunities GenPar, L.P., TSSP Opportunities GenPar IV, L.P. and TSSP Capital Solutions GenPar, L.P. is ultimately indirectly controlled by Alan Waxman. The address for each of these entities is 2100 McKinney Avenue, Suite 1500, Dallas, Texas 72501. The principal business address for Mr. Waxman is c/o Sixth Street Partners, LLC, 345 California Street, Suite 3300, San Francisco, California 94104. |
| (18) |
Consists of: (i) 2,143,138 shares of Class A common stock held of record by DST Global IV, L.P. (“DSTG IV”); (ii) 11,093,112 shares of Class B common stock held of record by DST Global II, L.P. (“DSTG II”); and (iii) 910,784 shares of Class A common stock held of record by AB Holdings, L.P. (“AB,” and together with DSTG IV and DSTG II, “DST Global”). DST Global is controlled by its general partner, DST Managers Limited, which holds ultimate voting and investment power over the shares held by DST Global. The address for DST Global is c/o Trident Trust Company (Cayman) Limited, One Capital Place, PO Box 847, Grand Cayman, KY1-1103, Cayman Islands. |
| (19) |
Consists of: (i) 75,168 shares of Class A common stock held of record by Jonathan Poulin; (ii) 498,710 shares of Class A common stock held of record by The Poulin Family Trust, for which Mr. Poulin is a trustee; and (iii) 1,705,878 shares of Class A common stock held of record by The Poulin Family International Trust (Cayman), for which Mr. Poulin is a trustee. The address for Mr. Poulin is c/o Dentons Delany, Burnham Court, Bishop’s Court Hill, Upper Collymore Rock, St. Michael BB11115, Barbados. The |
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address of The Poulin Family Trust is c/o Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711. The address for The Poulin Family International Trust (Cayman) is c/o Genesis Trust & Services Ltd., Second Floor, Elgin Court, Elgin Avenue, PO Box 448, George Town, Grand Cayman KY1 1106, Cayman Islands. |
| (20) |
Consists of: (i) 647,598 shares of Class A common stock held of record by Greystar Real Estate Partners, LLC (“GREP”); and (ii) 288,454 shares of Class A common stock held of record by GIG-Urbandoor Common Series 2015, a separate series of Greystar Investment Group, LLC. GREP is a Delaware limited liability company and is managed by Robert A. Faith, its founder and Chief Executive Officer. Entities controlled by Mr. Faith hold the majority of the common ownership of GREP. GIG-Urbandoor Common Series 2015, a separate series of Greystar Investment Group, LLC, is owned by GREP and an individual employee and officer of an affiliate of GREP. The series is managed by Greystar Investment Group, LLC, a Delaware limited liability company wholly owned by GREP. The address for each of these entities and individuals is 465 Meeting Street, Suite 500, Charleston, South Carolina 29403. |
| (21) |
Consists of: (i) 7,286 shares of Class A common stock held of record by Accel Growth Fund 2011 Investors L.L.C.; (ii) 105,246 shares of Class A common stock held of record by Accel Growth Fund L.P. (“AGF”); (iii) 2,050 shares of Class A common stock held of record by Accel Growth Fund Strategic Partners L.P. (“AGFSP”); (iv) 66,302 shares of Class A common stock held of record by Accel Investors 2012 L.L.C.; (v) 687,006 shares of Class A common stock held of record by Accel XI L.P. (“A11”); and (vi) 51,418 shares of Class A common stock held of record by Accel XI Strategic Partners L.P. (“A11SP”). Accel XI Associates L.L.C. is the general partner of each of A11 and A11SP. The managing members of Accel XI Associates L.L.C. are Andrew G. Braccia, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock, and Richard P. Wong. Accel XI Associates L.L.C. has sole voting and dispositive power with regard to the shares held by each of A11 and A11SP, and its managing members share such powers. The managing members of Accel Investors 2012 L.L.C. are Andrew G. Braccia, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock, and Richard P. Wong, all of whom share voting and dispositive power with regard to the shares held by Accel Investors 2012 L.L.C. Accel Growth Fund Associates L.L.C. is the general partner of each of AGF and AGFSP. The managing members of Accel Growth Fund Associates L.L.C. are Andrew G. Braccia, Kevin J. Efrusy, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock, and Richard P. Wong. Accel Growth Fund Associates L.L.C. has sole voting and dispositive power with regard to the shares held by each of AGF and AGFSP, and its managing members share such powers. The managing members of Accel Growth Fund 2011 Investors L.L.C. are Andrew G. Braccia, Kevin J. Efrusy, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock, and Richard P. Wong, all of whom share voting and dispositive power with regard to the shares held by Accel Growth Fund 2011 Investors L.L.C. The address for each of these entities and individuals is 500 University Avenue, Palo Alto, California 94301. |
| (22) |
Consists of 9,200,000 shares of Class H common stock issued by us to our wholly-owned subsidiary on November 10, 2020. Each share of Class H common stock is entitled to no votes and will convert into a share of Class A common stock on a share-for-share basis upon the sale of such share of Class H common stock to any person or entity that is not our subsidiary. For more information regarding our Class H common stock, see the section titled “Description of Capital Stock.” |
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The following summary describes our capital stock and the material provisions of our restated certificate of incorporation and our amended and restated bylaws, each of which will become effective immediately prior to the completion of this offering, the amended and restated investors’ rights agreement and the nominating agreement to which we and certain of our stockholders are parties, the voting agreement to which our founders are parties, and the Delaware General Corporation Law. Because the following is only a summary, it does not contain all of the information that may be important to you. For a complete description, you should refer to our restated certificate of incorporation, amended and restated bylaws, amended and restated investors’ rights agreement, nominating agreement, and voting agreement, copies of which have been filed as exhibits to the registration statement of which this prospectus is part.
General
Upon the filing of our restated certificate of incorporation and the completion of this offering, the total number of shares of all classes of stock we are authorized to issue will be 4,746,000,000 comprised of:
| • |
4,736,000,000 shares of common stock, $0.0001 par value per share, of which |
| • |
2,000,000,000 shares will be a series designated as Class A common stock; |
| • |
710,000,000 shares will be a series designated as Class B common stock; |
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2,000,000,000 shares will be a series designated as Class C common stock; and |
| • |
26,000,000 shares will be a series designated as Class H common stock; and |
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10,000,000 shares of preferred stock, $0.0001 par value per share. |
Assuming the conversion of all shares of our redeemable convertible preferred stock outstanding as of September 30, 2020, of which 239,623,894 shares are outstanding as of September 30, 2020, into an aggregate of 240,910,588 shares of our Class B common stock, including 1,286,694 shares of common stock issuable pursuant to the anti-dilution adjustment provisions relating to our Series C redeemable convertible preferred stock, which will occur immediately prior to the completion of this offering, and the net issuance of shares of our Class A common stock upon the vesting and settlement of RSUs, for which the service-based vesting condition was satisfied as of September 30, 2020 and for which we expect the liquidity-based vesting condition to be satisfied in connection with this offering, after withholding an aggregate of shares to satisfy associated estimated income tax obligations (based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and an assumed % tax withholding rate), there were shares of Class A common stock, shares of Class B common stock, and 9,200,000 shares of Class H common stock outstanding, held of record by stockholders, and no shares of our Class C common stock or redeemable convertible preferred stock outstanding. The outstanding shares of Class H common stock are held by our wholly-owned Host Endowment Fund subsidiary. We have no current plans to issue any Class C common stock. Our board of directors is authorized, without stockholder approval except as required by the Listing Rules of Nasdaq, to issue additional shares of our capital stock.
Class A, Class B, Class C, and Class H Common Stock
We have four series of authorized common stock: Class A, Class B, Class C, and Class H common stock. All outstanding shares of our redeemable convertible preferred stock will be converted into shares of our
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Class B common stock immediately prior to the completion of this offering. In addition, any options to purchase shares of our capital stock, RSUs, and warrants outstanding prior to the completion of this offering are eligible to be exercisable for or will be settled in shares of our Class A common stock or Class B common stock.
Voting Rights
Each holder of our Class A common stock is entitled to one vote per share, each holder of our Class B common stock is entitled to 20 votes per share, each holder of our Class C common stock is entitled to no votes per share, and each holder of our Class H common stock is entitled to no votes per share, on all matters submitted to a vote of the stockholders. The holders of our voting stock, consisting of Class A and Class B common stock, will generally vote together as a single class on all matters submitted to a vote of our stockholders, unless otherwise required by Delaware law or our restated certificate of incorporation. Delaware law could require holders of our Class A common stock, Class B common stock, Class C common stock, or Class H common stock to vote separately as a single class in the following circumstances:
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if we were to seek to amend our restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and |
| • |
if we were to seek to amend our restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in an adverse manner, the holders of the class would be required to vote separately to approve the proposed amendment; provided that if the amendment adversely affects one or more series of the class but does not adversely affect all of the series of the class, then only the holders of the series that are adversely affected, voting together as a class, would be required to separately to approve the amendment. |
Our restated certificate of incorporation will not provide for cumulative voting for the election of directors. See the subsection titled “ — Amendment of Charter Provisions” below.
Dividend Rights
The holders of our Class A, Class B, Class C, and Class H common stock are entitled to receive dividends as may be declared from time to time by our board of directors out of legally available funds. See the section titled “Dividend Policy” for additional information.
Conversion
Class B Common Stock
Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Each share of Class B common stock will convert automatically into one share of Class A common stock upon the earlier of (a) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 80% of the outstanding shares of Class B common stock at the time of such vote or consent, voting as a separate series, and (b) the 20-year anniversary of the closing of this offering. In addition, each share of Class B common stock held by Brian Chesky, Joe Gebbia, or Nathan Blecharczyk, whom we refer to as our founders in this prospectus (or any of such founder’s affiliates) will automatically convert into one share of Class A common stock on the nine-month anniversary of the death or disability of such founder. Furthermore, any transfer of shares of Class B common stock that occurs after the completion of this offering, except for certain permitted transfers summarized in the next paragraph or as further described in our restated certificate of incorporation, will result in the conversion of each such share of Class B common stock into one share of Class A common stock; provided, however, that, with the prior consent of each of the three founders, any transfer by a
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founder (or such founder’s affiliates) to one or more of the other founders (or such founders’ affiliates) will not result in the automatic conversion of such founder’s shares of Class B common stock; provided further that following the death or disability of any founder, such founder’s consent will not be required for these purposes. Once converted into Class A common stock, the Class B common stock will not be reissued.
As noted above, following the completion of this offering, shares of Class B common stock will automatically convert into shares of Class A common stock upon sale or transfer except for certain transfers to Affiliates, as defined and further described in our restated certificate of incorporation, including estate planning or charitable transfers where exclusive voting control with respect to the shares of Class B common stock are retained by the transferring holder, and certain permitted transfers by investment funds and mutual funds to their Affiliates. Certain limited transfers to non-Affiliates also will not trigger the automatic conversion into shares of Class A common stock, as further described in our restated certificate of incorporation.
Except for the issuance of shares of Class B common stock issuable in respect of any option, warrant, restricted stock unit, conversion right, or contractual right to acquire, or our obligation to issue shares outstanding immediately prior to the completion of this offering, a dividend payable, or a reclassification, subdivision, or combination, we cannot at any time after the completion of this offering issue any additional shares of Class B common stock.
Class C Common Stock
Shares of Class C common stock will not be convertible into any other shares of our capital stock. We have no current plans to issue any Class C common stock.
Class H Common Stock
Each outstanding share of Class H common stock will convert into a share of Class A common stock on a share-for-share basis upon the transfer, assignment, sale, or other disposition of such share of Class H common stock to any person or entity that is not our subsidiary.
Liquidation
In the event of our liquidation, dissolution, or winding up, holders of our Class A, Class B, Class C, and Class H common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities.
Treatment in a Merger
The consideration received per share by the holders of each series of common stock in any merger, consolidation, reorganization, or other business combination will be identical; provided, however, that if such consideration consists, in whole or in part, of shares of capital stock or other equity interests of our company or in any other corporation, partnership, limited liability company, or other entity, the powers, designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions (the “Rights and Preferences”) of shares of capital stock or other equity interests received may differ to the extent that the Rights and Preferences of our Class A, Class B, Class C, and Class H common stock differ as provided in our restated certificate of incorporation. In addition, if the holders of any series of common stock are granted the right to elect to receive one of two or more alternative forms of consideration, the foregoing will be satisfied if holders of the other series of common stock are granted corresponding election rights.
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Rights and Preferences
Holders of our Class A, Class B, Class C, and Class H common stock have no preemptive, conversion (except as noted above), or subscription rights, and there are no redemption or sinking fund provisions applicable to our Class A, Class B, Class C, or Class H common stock, except that we may at any time or from time to time redeem any outstanding shares of Class H common stock at a redemption price equal to the par value of the share of Class H common stock being redeemed.
Fully Paid and Non-Assessable
All of the outstanding shares of our Class A, Class B, and Class H common stock are fully paid and non-assessable.
Preferred Stock
Immediately prior to the completion of this offering, all of our currently outstanding shares of redeemable convertible preferred stock will convert into Class B common stock, and we will not have any shares of redeemable convertible preferred stock outstanding, whereupon our restated certificate of incorporation will be amended and restated to delete all references to such shares of redeemable convertible preferred stock. From and after the completion of this offering, our board of directors will have the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, and restrictions thereof. These rights, preferences, and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms, and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of our common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring, or preventing a change in control of our company or other corporate action. Immediately after the completion of this offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of preferred stock.
Nominating Agreement
We and our founders will enter into a Nominating Agreement, which will become effective prior to the completion of this offering (“Nominating Agreement”), under which we and the founders are required, upon the terms set forth in the Nominating Agreement, to (i) include our founders in the slate of nominees nominated by our board of directors for the applicable class of directors for election by our stockholders, and (ii) include such nomination of our founders in our proxy statement. In addition, we must use reasonable efforts to, and the founders must take all necessary action to, recommend in favor of each founder’s election as a director, and to solicit proxies or consents in favor of their election. The obligations with respect to each founder will terminate upon the earliest to occur of (1) such founder’s resignation from our board of directors, (2) such founder’s death or disability, (3) such founder’s removal from our board of directors for cause, (4) the expiration of such founder’s term if such founder has given notice of his intention not to stand for re-election, and (5) the date upon which the number of shares of our common stock owned by such founder falls below ten percent of the number of shares of common stock owned by such founder as of September 30, 2020. The Nominating Agreement will remain in effect until the earliest of (a) the date on which our and the founders’ obligations have terminated with respect to all of the founders, (b) the time at which all outstanding shares of Class B common stock automatically convert to Class A common stock, and (c) immediately prior to a change of control. The conversion of our Class B common stock to Class A common stock is provided for in our restated certificate of incorporation. See the subsection titled “ — Class A, B, C, and H Common Stock — Conversion” above.
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Founder Voting Agreement
Our founders will enter into a Voting Agreement, which will become effective prior to the completion of this offering (“Founder Voting Agreement”), under which each founder has agreed, upon the terms set forth in the Voting Agreement, to vote all his shares for the election of each founder to our board of directors, and to vote against their removal. Pursuant to the Founder Voting Agreement, each founder granted a voting proxy to the other founders, to be effective upon such founder’s death or disability, and if there are two remaining founders who are not disabled, such voting proxy will be apportioned between such founders based on their relative voting power. The Founder Voting Agreement will be in effect until: (i) with respect to each founder, upon the conversion of such founder’s shares to Class A common stock in connection with his death or disability (which will occur automatically upon the nine-month anniversary of any such death or disability), and (ii) with respect to all founders, the time at which all outstanding shares of Class B common stock automatically convert to Class A common stock. The conversion of our Class B common stock to Class A common stock is provided for in our restated certificate of incorporation. See the subsection titled “ — Class A, B, C, and H Common Stock — Conversion” above.
Equity Award Amendment
Equity awards granted under the Company’s 2008 Plan and 2018 Plan generally settle in shares of Class B common stock. Class B common stock automatically converts to Class A common stock upon transfer unless transferred to a permitted transferee. In connection with this offering, our board of directors amended all awards outstanding under our 2008 Plan and 2018 Plan to settle into Class A common stock, excluding the stock options held by individuals holding at least 1% of our outstanding capital stock (the “Equity Award Amendment”). Holders of Class A common stock received as a result of the Equity Award Amendment have the right to exchange on one occasion such shares of Class A common stock for an equal number of shares of Class B common stock until such time as the Class A common stock is transferred.
As of September 30, 2020, outstanding options to purchase 30,868,806 shares of Class B common stock and outstanding RSUs representing 90,137,252 shares of Class B common stock are impacted by the Equity Award Amendment. These awards are referenced in this prospectus as options to purchase Class A common stock and RSUs representing Class A common stock, respectively, unless indicated otherwise.
We expect to issue shares of our Class A common stock instead of Class B common stock due to the Equity Award Amendment, upon the vesting and settlement of RSUs for which the service-based vesting condition was satisfied as of September 30, 2020 and for which we expect the liquidity-based vesting condition to be satisfied in connection with this offering, after withholding an aggregate of shares to satisfy associated estimated income tax obligations (based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and an assumed % tax withholding rate) (the “RSU Settlement”).
Assuming that after the offering no holder requests that their Class A common stock received as a result of the RSU Settlement be exchanged for Class B common stock, the holders of our outstanding Class B common stock will hold % of the voting power of our outstanding capital stock following this offering, with our directors, executive officers, and 5% stockholders and their respective affiliates holding approximately % of the voting power. Assuming the converse, that is, that after the offering, holders request that all of their Class A common stock received as a result of the RSU Settlement be exchanged for Class B common stock, the holders of our outstanding Class B common stock will hold % of the voting power of our outstanding capital stock following this offering, with our directors, executive officers,
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and 5% stockholders and their respective affiliates holding approximately % of the voting power. These percentages are based on (a) the conversion of all outstanding shares of our redeemable convertible preferred stock, of which 239,623,894 shares are outstanding as of September 30, 2020, into an aggregate of 240,910,588 shares of our Class B common stock, including 1,286,694 shares of common stock issuable pursuant to the anti-dilution adjustment provisions relating to our Series C redeemable convertible preferred stock; (b) the RSU Settlement; (c) no exercise of other outstanding equity awards or convertible securities; and (d) no exercise by the underwriters of their option to purchase up to additional shares of our Class A common stock.
Stock Options
As of September 30, 2020, we had outstanding options to purchase an aggregate of 24,460,092 shares of our Class A common stock, with a weighted-average exercise price of $5.96 per share, pursuant to our 2008 Plan.
As of September 30, 2020, we had outstanding options to purchase an aggregate of 13,788,876 shares of our Class B common stock, with a weighted-average exercise price of $3.18 per share, pursuant to our 2008 Plan.
As of September 30, 2020, we had outstanding options to purchase an aggregate of 6,408,714 shares of our Class A common stock, with a weighted-average exercise price of $49.77 per share, pursuant to our 2018 Plan.
As of September 30, 2020, we had outstanding options to purchase an aggregate of 181,782 shares of our Class A common stock, with a weighted-average exercise price of $22.65 per share, pursuant to our Hotel Tonight Plan.
Restricted Stock Units
As of September 30, 2020, we had outstanding RSUs representing 38,221,076 shares of our Class A common stock, issued pursuant to our 2008 Plan.
As of September 30, 2020, we had outstanding RSUs representing 51,916,176 shares of our Class A common stock, issued pursuant to our 2018 Plan.
As of September 30, 2020, we had outstanding RSUs representing 42,580 shares of our Class A common stock, issued pursuant to our Hotel Tonight Plan.
Warrants
As of September 30, 2020, we had outstanding warrants to purchase 7,934,794 shares of our Class A common stock, with an exercise price of $28.355 per share.
Consideration of Other Constituencies
In acknowledgment of our goal of serving all stakeholders over the long-term, our restated certificate of incorporation, which will become effective immediately prior to the completion of this offering, provides that our company will be managed with the goal of considering the interests of our stakeholders for the long-term benefit of our company. It also provides that, in addition to any other considerations which our board of directors, any committee thereof, or any individual director lawfully may take into account in determining whether to take or refrain from taking corporate action on any matter, including making or declining to make any recommendation to our stockholders, our board of directors, any committee thereof,
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or any individual director may, in his, her, or its discretion, consider the long-term as well as the short-term interests of our company, taking into account and considering, as deemed appropriate, the effects of such action on our (i) stockholders and (ii) other stakeholders, including hosts, guests, communities, and employees, and in the case of (ii), as may be identified or revised by our board of directors from time to time. The restated certification of incorporation also provides that nothing in our restated certificate of incorporation or any other governing document, policy, or guideline adopted by us will (i) create any duty owed by any director to any person or entity to consider, or afford any particular weight to, any of the foregoing matters or to limit his or her consideration thereof or (ii) other than as vested in our stockholders to the extent provided under applicable law, be construed as creating any rights against any director or us. These constituency provisions grant discretionary authority only to the extent consistent with and permitted by law, and do not confer third-party beneficiary status on any person or entity.
Host Endowment Fund
In October 2020, we established Airbnb Host Endowment, a wholly-owned limited liability company (the “Host Endowment Fund”) that is designed to allow our hosts to share in the success of our business. The Host Endowment Fund has been funded with 9.2 million shares of our newly issued Class H common stock. Shares of Class H common stock, which we expect will only be issued to the Host Endowment Fund, have no voting rights, and convert into shares of Class A common stock on a share-for-share basis upon the sale of shares of Class H common stock. It is our current intent that the total number of shares contributed to the Host Endowment Fund by us, when aggregated with any prior contributions, will not exceed two percent of our total shares outstanding at the time of any future contribution. Third parties may also contribute to the Host Endowment Fund, and we have set no limit on contributions to the Host Endowment Fund from other entities, organizations, or individuals. We presently intend to make distributions to benefit our host community annually, though these will not begin until after the value of assets held by the Host Endowment Fund exceeds $1.0 billion. We expect that distributions will be made using the proceeds from the sale of shares of Class A common stock issuable upon the conversion of the Class H common stock. We intend that the number of shares that will be distributed, converted, and sold by the Host Endowment Fund will be limited with the objective that the value of the shares remaining in the Host Endowment Fund will not be less than $1.0 billion after the distribution.
The goal of the Host Endowment Fund is to support and benefit our host community through a variety of potential programs, initiatives, and grants. We want hosts to share in our success, not merely for a single moment in time, but for as long as Airbnb exists in the world. We intend the Host Endowment Fund to be a long-term investment in the future of our host community, to be shaped by hosts for hosts. Although distributions under the Host Endowment Fund will be informed by input and proposals from the host community, distributions will be made at our sole discretion as determined by our board of directors or a committee of our board of directors. We also retain the right to amend our plans for the Host Endowment Fund.
Registration Rights
Upon the completion of this offering, certain holders of our Class B common stock and warrants to purchase our Class A common stock will be entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in the Investors’ Rights Agreement. We, along with our founders and certain holders of our redeemable convertible preferred stock and warrants are parties to the Investors’ Rights Agreement. The registration rights set forth in the Investors’ Rights Agreement terminate upon the earlier to occur of (i) five years following the completion of this offering, and (ii) with respect to any particular stockholder, on the first anniversary of the completion of
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this offering so long as such stockholder is able to sell all of its Registrable Securities, as defined in the Investors’ Rights Agreement, without restriction pursuant to Rule 144 during any three-month period. We will pay the registration expenses (other than any underwriting discounts and selling commissions) of the holders of the shares registered for sale pursuant to the registrations described below, including the reasonable fees of one counsel for the selling holders not to exceed $50,000. However, we will not be required to bear the expenses in connection with the exercise of the demand registration rights of a registration if the request is subsequently withdrawn at the request of the selling stockholders holding a majority of securities to be registered. In an underwritten public offering, the underwriters have the right, subject to specified conditions, to limit the number of shares such holders may include.
Demand Registration Rights
Upon the completion of this offering, assuming the selling stockholders sell shares and there is no exercise of the underwriters’ option to purchase additional shares, the holders of up to approximately shares of our common stock and warrants to purchase 7,934,794 shares of our common stock will be entitled to certain demand registration rights. At any time beginning on the earlier of (i) April 17, 2024 and (ii) 180 days after the completion of this offering, the holders of at least 30% of these shares then outstanding can request that we register the offer and sale of their shares on a registration statement on Form S-1 if we are eligible to file a registration statement on Form S-1 so long as the request covers at least that number of shares with an anticipated offering price, net of underwriting discounts and commissions, of at least $100.0 million. We are obligated to effect only two such registrations. If we determine that it would be materially detrimental to us and our stockholders to effect such a demand registration, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 90 days. In addition, we will not be required to effect a demand registration during the period beginning 60 days prior to our good faith estimate of the date of the filing of and ending on a date 180 days following the effectiveness of a registration statement initiated by us.
S-3 Registration Rights
Upon the completion of this offering, assuming the selling stockholders sell shares and there is no exercise of the underwriters’ option to purchase additional shares, the holders of up to approximately shares of our common stock and warrants to purchase 7,934,794 shares of our common stock will be entitled to certain Form S-3 registration rights. The holders of at least 30% of these shares then outstanding may make a written request that we register the offer and sale of their shares on a registration statement on Form S-3 if we are eligible to file a registration statement on Form S-3 so long as the request covers at least that number of shares with an anticipated offering price of at least $50 million. These stockholders may make an unlimited number of requests for registration on Form S-3; however, we will not be required to effect a registration on Form S-3 if we have effected two such registrations within the 12-month period preceding the date of the request. In addition, if we determine that it would be materially detrimental to us and our stockholders to effect such a registration, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 90 days. Lastly, we will not be required to effect a demand registration during the period beginning 30 days prior to our good faith estimate of the date of the filing of and ending on a date 90 days following the effectiveness of a registration statement initiated by us.
Piggyback Registration Rights
Assuming the selling stockholders sell shares and there is no exercise of the underwriters’ option to purchase additional shares, if we propose to register the offer and sale of our common stock under the Securities Act, in connection with the public offering of such common stock, the holders of up to approximately shares of our common stock and warrants to purchase 7,934,794 shares of our
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common stock will be entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations, which, in the case of an underwritten offering, will be in the sole discretion of the underwriters. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to (i) a registration related solely to a company stock plan, (ii) a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the public offering of our common stock, or (iv) a registration in which the only common stock being registered is common stock issuable upon the conversion of debt securities that are also being registered, the holders of these shares are entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.
Anti-Takeover Provisions
The provisions of the Delaware General Corporation Law, our restated certificate of incorporation, and our amended and restated bylaws, which are summarized below, may have the effect of delaying, deferring, or discouraging another person from acquiring control of our company. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Delaware Law
We are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales, or other transactions resulting in a financial benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of delaying, deferring, or preventing a change in our control.
Restated Certificate of Incorporation and Amended and Restated Bylaw Provisions
Our restated certificate of incorporation and our amended and restated bylaws, each of which will become effective immediately prior to the completion of this offering, contain provisions that could make the following actions and transactions, among others, more difficult: acquisition of us by means of a tender offer, acquisition of us by means of a proxy contest or otherwise, or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
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Multi-Series Stock
As described above in the subsection titled “ — Class A, Class B, Class C, and Class H Common Stock — Voting Rights,” our restated certificate of incorporation will continue to provide for a multi-series common stock structure, which will provide our founders, current investors, executives, and employees with significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets.
Undesignated Preferred Stock
The ability to authorize undesignated preferred stock will make it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to effect a change in control of our company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
Special Stockholder Meetings
Our restated certificate of incorporation will provide that a special meeting of stockholders may only be called by an officer of our company pursuant to a resolution adopted by a majority of our board of directors then in office or the chairperson of our board of directors.
Stockholder Action by Written Consent
Our restated certificate of incorporation will provide that from and after the date holders of our Class B common stock hold less than 50% of the voting power of our capital stock, no action may be taken by our stockholders by written consent.
Requirements for Advance Notification of Stockholder Proposals and Nominations
Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.
Classified Board; Election and Removal of Directors; Filling Vacancies
Effective upon the completion of this offering, our board of directors will be divided into three classes, divided as nearly as equal in number as possible. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders, with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Because our stockholders do not have cumulative voting rights, our stockholders holding a majority of the voting power of the then outstanding capital stock will be able to elect all of our directors. Our restated certificate of incorporation will provide for the removal of any of our directors only for cause and requires a stockholder vote by the holders of a majority of the voting power of the then outstanding capital stock. For more information on the classified board, see the section titled “Management — Classified Board of Directors.” Furthermore, our board of directors has the exclusive right to set the size of the board of directors, and any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of the board, may only be filled by a resolution of the board of directors unless the board of directors determines that such vacancies will be filled by the stockholders. This system of electing and removing directors and filling vacancies may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.
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Forum Selection
Our certificate of incorporation and bylaws currently provide, and our restated certificate of incorporation and amended and restated bylaws, which will become effective immediately prior to the completion of this offering, will provide, that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action or proceeding brought on behalf of the company, (B) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former director, officer, other employee, agent or stockholder to the company or our stockholders, including without limitation a claim alleging the aiding and abetting of such a breach of fiduciary duty, (C) any action asserting a claim against the company or any of our current or former director, officer, employee, agent or stockholder arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (D) any action asserting a claim related to or involving the company that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; (iii) any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the company will be deemed to have notice of and consented to these provisions; and (iv) failure to enforce the foregoing provisions would cause us irreparable harm, and we will be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Nothing in our current certificate of incorporation or bylaws or our restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.
Although our restated certificate of incorporation and amended and restated bylaws will contain the choice of forum provision described above, it is possible that a court could find that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable.
Amendment of Charter Provisions
Any amendment of the above provisions in our restated certificate of incorporation would require approval by holders of a majority of the voting power of the then outstanding capital stock, except the following: (i) at least 66-2⁄3% of the voting power of the outstanding shares of capital stock, voting together as a single class, will be required to amend or repeal, or adopt any provision inconsistent with: (A) the provisions governing the size of our board of directors, the classified board of directors, the election and the removal of directors, the filling of vacancies on our board of directors, the authority of our board of directors to adopt, repeal, alter, amend, or rescind our bylaws, and the voting threshold required for stockholders to adopt, repeal, alter, amend, or rescind our bylaws, (B) the provision specifying that only an officer of our company pursuant to a resolution adopted by a majority of our board of directors or the chairperson of our board of directors may call special stockholder meeting, (C) the provisioning specifying that stockholders will have the ability to act by written consent only as long as holders of our Class B common stock hold at least 50% of the voting power of our capital stock, and (D) this amendment threshold requirement; and (ii) at least 80% of the shares of Class B common stock outstanding at the time of such vote, voting as a separate series, is required to amend or repeal, or adopt any provision
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inconsistent with: (A) the provision governing the right of each share of Class B common stock being entitled to 20 votes, (B) the provisions governing the conversion of the Class B common stock, including the requirement that the vote or written consent of the holders of at least 80% of the outstanding shares of Class B common stock is required to effect an automatic conversion of all Class B common stock to Class A Common stock; and (C) this amendment threshold requirement.
Amendment of Bylaws
Our board of directors is expressly authorized to adopt, amend, or repeal our amended and restated bylaws. In addition, our amended and restated bylaws can be adopted, amended, or repealed with the approval of the affirmative vote of the holders of at least 66 2⁄3% of the voting power of all our then-outstanding shares of capital stock.
Limitation on Liability and Indemnification
For a discussion of limitation on liability and indemnification, see the section titled “Management — Limitation on Liability and Indemnification Matters.”
Transfer Agent and Registrar
Upon the completion of this offering, the transfer agent and registrar for our Class A, Class B, Class C, and Class H common stock will be Computershare Trust Company, N.A. The transfer agent’s address is 150 Royal Street, Canton, MA 02021.
Listing
We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “ABNB.”
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Description of Certain Indebtedness
The following is a summary of the material terms of certain of our indebtedness. The summary is qualified in its entirety by reference to the full text of the agreements governing the terms of such indebtedness, which are filed as exhibits to the registration statement of which this prospectus is a part.
First Lien Loan
In April 2020, we, as borrower, and certain of our subsidiaries, as guarantors, entered into a $1.0 billion First Lien Credit Agreement with Cortland Capital Market Services LLC, as administrative agent, and the lenders from time to time party thereto, resulting in proceeds of $961.4 million, net of debt discount and issuance costs. The loan is due and payable in April 2025. The underlying loan can be repaid in whole or in part prior to April 2025 at our option, subject to applicable prepayment premiums and make-whole premiums.
Interest and Fees
Interest on the First Lien Loan is payable monthly or quarterly in arrears, at our option depending on the chosen per annum interest rate equal to (i) in the case of LIBOR borrowings, 7.5% plus LIBOR, subject to a floor of 1% (the “First Lien Eurodollar Rate”), or (ii) in the case of base rate borrowings, 6.5% plus the greatest of (a) the prime rate, (b) the federal funds effective rate plus 0.5%, and (c) LIBOR for a one-month period plus 1%, subject to a floor of 2%.
Interest on base rate borrowings is payable in arrears on the last business day of each March, June, September, and December and on the maturity date of the First Lien Loan. Interest on LIBOR borrowings is payable at the end of each applicable interest period of one month or three months. Interest on all past due amounts will accrue at 2% per annum in excess of the applicable rate (the “Default Rate”). The Default Rate will also apply upon the occurrence of an event of default, subject to customary conditions.
We pay certain customary administration fees under the First Lien Credit Agreement.
Guarantees and Security
All obligations under the First Lien Credit Agreement are unconditionally guaranteed by substantially all of our existing and future, direct and indirect, wholly-owned material domestic subsidiaries, subject to certain exceptions.
All obligations under the First Lien Credit Agreement, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of our and our subsidiary guarantors’ assets, subject to certain exceptions.
Amortization and Prepayments
Beginning in September 2020, we are required to repay the First Lien Loan in quarterly installments equal to 0.25% of the aggregate principal amount of $1.0 billion of the First Lien Loan.
The remaining principal amount outstanding under the First Lien Loans is due and payable in full at maturity.
Voluntary Prepayments
We may prepay at our option, in full or in part, borrowings under the First Lien Credit Agreement, subject to notice requirements, minimum prepayment amounts, increment limitations, and a prepayment premium and a make-whole premium under certain circumstances as described below.
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Mandatory Prepayments
The First Lien Credit Agreement requires us to prepay outstanding First Lien Loans, plus any applicable prepayment premium and make-whole premium, in the event of non-ordinary course asset sales or other dispositions of property, or incurrence or issuance by us or certain of our subsidiaries of any indebtedness, subject to certain exceptions, with:
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